Ozzie Quizzed on Cloud Strategy at PDC

Microsoft officials briefed financial analysts on the company's cloud computing strategy at its Professional Developers Conference (PDC) in Los Angeles on Wednesday.

Questions were fielded by Ray Ozzie, Microsoft's chief software architect, as well as Doug Hauger, general manager of Windows Azure. Of course, the big news was Microsoft's announcement on Tuesday that its Windows Azure-based datacenters would open for commercial service on Jan. 1, with billing ramping up on Feb. 1.

Ozzie began the briefing with the analysts by laying out Microsoft's oft-stated vision of three screens and a cloud -- a world of the PC, phone and TV all connected through the Internet. Next he described his role in trying to jump-start Microsoft's cloud computing efforts to help support that vision.

"We started investing in this cloud computing transformation, and a belief in this cloud computing transformation, about three years ago now," Ozzie said. "What we believed was that things were happening so rapidly and so significantly that this could be really transformational in a way that would impact computing for the next 20 to 30 years. So we started from the ground up -- literally the ground."

By that, Ozzie meant that Microsoft started its cloud computing efforts with so-called generation-1 datacenters, which are simply racks of computers where Microsoft manually installed the operating systems. He explained that gen-1 is where most companies involved in cloud computing are today. Gen-2 is the stage where multiple servers are added, but Microsoft's recent datacenter deployments have been gen-3, such as the one Microsoft opened several weeks ago in Chicago.

Gen-3 means modularizing containers or, as Ozzie described it, "cloud plug-and-play." Multiple servers are housed in a large building with roll-up doors. Microsoft can back up its trucks with 20-foot cargo containers filled with servers into that building. Microsoft then stacks these containers on top of each other. Ozzie said that this gen-3 approach has cut down Microsoft's supply-chain time to weeks rather than months.

Gen-4 is even leaner than gen-3. With gen-4, the servers are kept in cargo containers on the outside, absent a large warehouse. The goal of this approach is to shrink the capital investment, Ozzie said. For gen-4, Microsoft called on the talents of Dave Cutler, the principal developer behind Windows NT and a Microsoft Technical Fellow, to build a new operating system for the cloud, which became Windows Azure. Ozzie distinguished the use of the Windows Azure cloud computing OS from the old-model approach of plugging a traditional OS into a datacenter. Those traditional models do not provide the value of cloud computing, he said.

As part of this vision, Microsoft retooled Exchange and SharePoint as online services. Ozzie said that it gives enterprises the option to switch to services, and that with the current economic crisis, demand for the online products has been "tremendous." Mail and document sharing will be the most important cloud-based applications for businesses, he said.

Hauger stressed cost savings, agility and ease of implementation for Microsoft's cloud services. While Microsoft has 6 to 7 million developers around the world, the Windows Azure platform isn't just for .NET developers. Microsoft added developer support with Eclipse integration and supports PHP, MySQL, Ruby, Python and Java on Windows Azure.

Windows Azure supports both consumer and enterprise needs, Ozzie and Hauger emphasized. Hauger listed a few enterprise trial users of Windows Azure, including Coca-Cola, which is using the platform for order processing and its product database. A company called RiskMetrics Group performs its financial analyses using the Windows Azure platform for massively parallel high-performance computing of up to 40,000 instances at time. Companies like Kelly Blue Book and Domino's Pizza use Windows Azure to deal with peak demand issues that affect Web operations, according to Hauger. GlaxoSmithKline is using Microsoft's Business Productivity Online Suite (BPOS) service for e-mail federation using Active Directory, he added.

An analyst questioned Microsoft's BPOS services and the kind of margins Microsoft expected to see from them. Hauger didn't cite specifics, but claimed that Microsoft's Dublin gen-4 datacenter offers "dramatic economies of scale." Developers can then charge on top of that, he added.

Another question was about potential problems in porting legacy applications to the cloud. Ozzie said that it was "relatively straightforward to port those apps." Legacy apps designed for "one-box" computers can fail when moved to the cloud, he added, but "most people do a move, extend and transform"-type operation.

"They'll move something to the cloud, and then they'll start to mess around with it and understand what it's like to be in the cloud," Ozzie said. "And then they'll extend it by starting to take some aspect of it and take advantage of the cloud."

Moving things like e-mail, SharePoint and collaboration applications is "very straightforward," Ozzie added. Hauger said that moving some apps, such as moving SQL Server to SQL Azure, can be simple.

"If they're running Microsoft stuff now on premises, then if all they are doing is moving...they could move it as a virtual instance to our cloud or frankly to Amazon's because Amazon is a great [partner]," Ozzie said. He added that they'll still hit a roadblock when they want to transform it.

"The transformation will not be possible," Hauger said.

Ozzie was asked if cloud computing was just a way of commoditizing IT.

"I think there's an aspect of it that's commoditization," Ozzie said. "There are certain things though that you can do in a cloud, which is very horizontal for scalable things. These are things you can't do in a different infrastructure."

"But yes, we are trying to be the low-cost producer in terms of back-end computing," Ozzie said.

He added that Microsoft expected to handle things like e-mail much more cost effectively with its cloud computing platform.

Hauger said to expect commoditization of the basic things in IT, but that customers are looking to do more and will pay for a massively scalable and highly parallel system.

Ozzie added that a focus on data was key, citing as an example the U.S. government's data.gov Web site, where it's just too difficult for developers to get that data and reformat it. Windows Azure will let people more easily plug into such public data, he explained.

Ozzie also complimented Google's focus on data as a key to that company's success.

"Google's biggest advantage right now is the fact that they are such a master at understanding the data -- not just the data of the Web [but] observing what people are searching for," he said.

In response to a question about what percentage of businesses will opt for using the cloud, Ozzie didn't have an answer. However, he predicted that all lightweight workloads and anything Web-based will be 100 percent in the cloud. He noted that old technologies don't necessarily go away, as evidenced by the persistence of server mainframes. Different mixes of cloud and premises-based solutions will exist depending on the company's compliance requirements, he added.